AIR - Air NZ.

[bung5]

Around PE of 11 is average I think. Air currently 8.5.

kk I'll settle with you with that the industry average is 30% more than airnz PE. So certainly doesn't seem to be overvalued

[Beagle]

At $2.87 AIR trades on a 2017 PE of 9 based on my forecast of 32 cps. Their ten year average PE is 11. I defy anyone to accurately state what part of the airline cycle we are currently at. It seems to me competition is starting to become somewhat ameliorated from the peak intensity of late 2017. AIR management seemed very confident of improving yields going forward at their most recent conference call and are undoubtedly in the best position to know. I won't say what I think they're worth after getting egg on my face last year...all I will say is that those in this for the fully imputed dividends are very well positioned as we're only 2 years away from the completion of a very thorough fleet upgrade bringing the average age down to a very young 6.2 years. This hounds long range nose can smell those XXXXXXL special dividends coming after that major capex program completion along with regular six monthly ~ 10 cent fully imputed feeds in the meantime to keep him well fed and watered. Investing in an airline for long term dividend income might seem like a contradiction to common sense conventional investment theory but it makes perfect sense to me. Whether the stock is $2, $3, or even $4 makes no difference to me.

On a relative basis AIR seems at least as good value as QAN in my opinion.

Market seems to think there's an imminent profit upgrade coming. Could be some grounds to think that as I've thought for some time now their official forecast for FY17 of circa $500m was is very conservative. Certainly the first half performance set them up for the year very well.

[Xerof]

yep, on their average PE, the price is easily $3++, but I'd settle for $3.10/15, and leave a bit for someone else (and make it snappy - I have a good use for the funds in the next little while)

At the time I did think $500m could have been realistic, given their comments about tailwinds turning to headwinds, but they seem to be basking under a big H at the moment, getting on with business. So now I think we can say they were just shaggy dog stories

[couta1]

Your all heart Xerof, don't you feel sorry for all those poor buggers buying in at those prices, the bit left on the table won't be any consolation when the whole table is ripped from under them.

[Beagle]

I topped up a few more at $2.76 this week so unsurprisingly I hold a different view. My thinking is that their business model has evolved a fair bit under Chris Luxon's leadership with a lot of code / revenue sharing and a more modern simplified fleet. I also think they have a laser focus on more prudent expansion in the future and will only expand routes where there's proven demand. Fact is we are looking at the second highest profit in FY17 when they've been subjected to very intense international competition so I think their business model is actually now very resilient. I expect they'll continue to perform very well for the foreseeable future, (acknowledge that comes with a caveat that we don't experience a GFC MK2), and as stated above shareholders can look forward to some very special dividends once their comprehensive fleet upgrade program is completed in FY19.

[BlackPeter]

Interesting SP development ... but it feels to me more and more like an approaching peak.

Analysts are as well much more careful when assessing this stock (12 month consensus in 4 traders is $2.23 (with a quite close range from $2.10 to $2.31) together with a "hold" recommendation.

RSI is around (and currently slightly above 70) - in overbought territory (and this already for some time).

I do see the still juicy forward PE of 8.8 which is somewhat inconsistent with the 12 month consensus (though - maybe there is a reason?) - but I think that analysts are as well starting to wonder when the current boom period ends.

Admittedly - oil might stay in the current region for a long time to come, given the oversupply and the ease to increase the supply if the price goes just slightly further up (though I don't know anybody who in the past predicted the oil price with any sort of accuracy), but this is obviously good for the competition as well.

The US might put funny restrictions on Muslim carriers, but in the long term I don't see this sticking. If there is a real threat, than any restriction will latest after the first laptop explosion on an US carrier apply to all.

And not sure I see tourism growth as a one way street. At some stage we will have another terror attack, another GFC, another volcanic eruption - or just the start of either the "post trump" or the "trump still hanging around" hangover and any of this will hurt an airline share in the top quartile more than one purchased in the bottom quartile.

I feel that midterm the SP is more likely to go down than up - and just looking at the current movement I think that Buffet's "be fearful when others are greedy" might be the appropriate saying for this situation.

Anyway - don't want to spoil the party: Enjoy the dance but stay close to the exit in case the music stops, though I agree that AIR is one of the better airlines. They are unlikely to bite the dust anytime soon, but they might be in a year or two cheaper to buy then they are now.

[Beagle]

With all due respect BP you've been saying ostensibly the same thing since they were ~ $1.73 around 7-8 months ago and they've paid a 10 cent fully imputed dividend during that timeframe. $1.24 increase later ($2.87-$1.73 + 0.10 divvy) a whopping 74% in total shareholder return...you're singing the same tune.
The analysts have a very poor record of predicting future SP movements with this stock...far better off tuning into the conference calls after interim and final results and listening to Chris Luxon and reading what else they have to say, the most recent of which is here https://www.nzx.com/files/attachments/257547.pdf

[forest]

What ST members think of John Key on the board.
I must confess I bought a few when I saw the announcement of JK joining the board.
But I also must confess that I find it impossible to quantify to what extend his contribution would contribute
to future growth if any.

[Beagle]

As former minister of Tourism and PM he will have some valuable international contacts which will be useful to the company and his pragmatic style of leadership will also be useful, in my opinion. Worth noting that the SP has shown considerable northward movement since the announcement of his appointment, both on the day of the announcement itself and since then, coincidence or not ?, you folks be the judge. John Key also had some highly complimentary things to say about the company at the time of the announcement of his appointment, perhaps international institutional investors who hold the vast bulk of the shares not owned by the N.Z. Govt see what he had to say or his appointment itself as a genuine endorsement of the company ? Someone's been driving up the SP and it won't be the lowly 4% of shares held by retail N.Z. investors doing it that's for sure and it certainly won't be anyone listening to N.Z. analysts views of fair value either !

Overseas institutions buying even more shares because they have confidence in John Key's leadership ? How long before he's the Chairman of the Board ?
When you get your head around the fact that retail and N.Z. Institutional investors only own just on 100million of the 1,123million shares of the company I think this gives an interesting insight into what impact JK's appointment has on the minds of the overseas institutions who own the vast bulk of the free float shares of AIR (excl Govt majority stake).

[Elles]

With all due respect BP you've been saying ostensibly the same thing since they were ~ $1.73 around 7-8 months ago and they've paid a 10 cent fully imputed dividend during that timeframe. $1.24 increase later ($2.87-$1.73 + 0.10 divvy) a whopping 74% in total shareholder return...you're singing the same tune.

All the more reason to think they're overpriced at the moment then?